By Stefan J. Bos, Chief International Correspondent
NEW YORK/BUDAPEST (Worthy News) – China’s new artificial intelligence (AI) model, DeepSeek, spooked investors Monday, sparking a $1 trillion withdrawal from stocks in the United States and Europe.
In New York, the tech-focused Nasdaq index was down nearly 3.5 percent at the market open as investors ran for the exits.
Several tech companies that banked on a surge of AI interest sold off, with U.S. chipmaker Nvidia down more than 12 percent as the trading day began.
Nvidia has exploded in value in recent years as it dominates the chip market at the center of the global AI race. It’s one of three companies with a market capitalization above $3 trillion.
In Europe, Netherlands-based ASML Holding NV, which designs and produces the machines that make the world’s most advanced computer chips, also saw its stock plunge up to 12 percent before slightly recovering.
Analysts said the Monday sell-off underscores anxieties about whether China is challenging America’s AI dominance and whether the multi-billion dollar spending on artificial intelligence ― and the specialized chips, data centers, and related power infrastructure ― is justified.
The DeepSeek application, launched last week, overtook rivals, including ChatGPT, to become the most downloaded free app in the United States. However, its creators claim that it cost less than $6 million to develop, a far cry from the billions spent in the U.S.
CHEAPER CHIPS
They also used H800 chips, which are not top-of-the-line.
These less advanced chips were reportedly developed as a reduced-capability product to circumvent restrictions on sales to China. Yet, according to sources familiar with the situation, U.S. sanctions eventually banned them.
With China now firmly in the AI race, some commentators have raised questions about how soon American investments will translate into straightforward money-making use cases for U.S. companies.
The emergence of the low-cost Chinese competitor added to skepticism over those investments. “Markets are sensitive to this situation, as heightened price competition raises doubts about the timing of when profits from multi-billion-dollar investments will materialize,” complained Alex Kuptsikevich, chief market analyst at FxPro, a London-based online broker.
“DeepSeek shows that it is possible to develop powerful Al models that cost less,” added Vey-Sern Ling, managing director at Union Bancaire Privee, the Geneva-based private bank and wealth management firm.
“It can potentially derail the investment case for the entire Al supply chain, which is driven by high spending from a small handful of hyperscalers.”
If the losses hold, the Nasdaq 100 and Europe’s Stoxx 600 technology sub-index will experience a market capitalization wipeout of $1.2 trillion, according to market watchers.
Besides stocks, Bitcoin also lost value, falling below $100,000 on Monday, its lowest in 11 days, amid broader market anxiety over the surging popularity of the Chinese artificial intelligence model, which sparked a selloff in Western Al-related stocks.
The world’s biggest cryptocurrency struggled to make gains last week, as a rally that had seen it break above $100,000 after U.S. President Donald J. Trump’s election and endorsement of crypto ran out of steam, market observers noticed.
Copyright 1999-2025 Worthy News. This article was originally published on Worthy News and was reproduced with permission.
More Worthy News
A leading war crimes lawyer at the International Criminal Court (ICC) in The Hague, the Netherlands, has publicly raised doubts that Israel committed genocide in Gaza.
Malaysia’s government says it is launching a “national digital identity ecosystem” named “MyDigital ID Superapp” across the Asian nation.
The Dream Center Christian charity which provides food and housing for those in need in Los Angeles has reported a surging interest in the Gospel among volunteers who have flocked to help bring relief following the recent devastating California wildfires that killed 24 people and destroyed some 12,000 buildings and homes.
President Donald Trump’s first week in office has seen US Immigration and Customs Enforcement (ICE) and federal partner agencies arrest more than 3,500 undocumented migrants, including dozens of members of the notoriously criminal Venezuelan Tren de Aragua gang.
by Karen Faulkner, Worthy News Correspondent (Worthy News) – In a move that may significantly broaden religious rights in America, the US Supreme Court has agreed to hear an appeal from an Oklahoma Catholic school that seeks to become the nation’s first publicly funded religious charter school, the Hill reports. Accepting the case on Friday, the Justices will consider whether Oklahoma’s Supreme Court was right to block St. Isidore of Seville Catholic Virtual School from opening as a public religious charter school. In 2023, the Archdiocese of Oklahoma City requested Oklahoma state funding for a virtual charter school shortly after … Read more
US citizen Ryan Corbett was last week released from nearly 900 days in captivity after being taken hostage by the Taliban in Afghanistan in August 2022.
Blocking government funding for abortions both in the US and abroad, newly inaugurated President Donald Trump on Friday reinstated the Mexico City Policy and the Hyde Amendment.